NEWTON COVENANT CHURCH, GARRETT SMITH, CARMEN ALDINGER, ANDERS BROWNSWORTH, THOMAS DEVOL, HAROLD JONES, DORIS KELLOM, KRISTEN LUCKEN, ROGER MARK, ROSELIND PICARD, DANIEL ROMAINE, BEATRICE YANKEY, Plaintiffs, Appellants, v. GREAT AMERICAN INSURANCE COMPANY, Defendant, Appellee.
No. 19-1826
United States Court of Appeals For the First Circuit
April 10, 2020
Before Lynch, Circuit Judge, Souter,* Associate Justice, and Lipez, Circuit Judge.
APPEAL FROM THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF MASSACHUSETTS [Hon. Richard G. Stearns, U.S. District Judge]
Kimberly L. Wehle, with whom Miller Friel, PLLC, Robert J. Gilbert, and Latham & Watkins, LLP were on brief, for appellants.
Ashly Scheufele, with whom Barry S. Pollack and Pollack Solomon Duffy LLP were on brief, for appellee.
April 10, 2020
* Hon. David H. Souter, Associate Justice (Rеt.) of the Supreme Court of the United States, sitting by designation.
Newton Presbyterian Church (NPC) is a member church of a national Presbyterian denomination known as the Presbyterian Church (USA) (PCUSA). On January 15, 2017, a majority of NPC‘s members voted to withdraw from PCUSA and to affiliate with a non-Presbyterian organization: the Evangelicаl Covenant Church. The withdrawing members called themselves the “Newton Covenant Church” (NCC).
On March 17, 2017, NPC and the Presbytery of Boston1 brought suit in Suffolk Superior Court against NCC and those individuals chosen to act as its officers, аlleging trespass and conversion. According to the complaint, the NCC and its officers had succeeded in unlawfully exerting control over NPC real property, as well as NPC bank accounts, following a dispute over PCUSA‘S “progressive stances” on same-sex marriage and the ordination of gay, lesbian, bisexual and transgender ministers. App. 41. The complaint alleged that the “break-away” group had rejected the Presbytery‘s authority to resolve the ecclesiastical schism, and insteаd conducted a “vote” not authorized under the PCUSA‘s Constitution. App. 42-43. Among other things, NPC and the Presbytery sought a declaratory judgment that NPC owned church property at 75 Vernоn Street, in Newton, Massachusetts.
On March 23, 2017, the group known as NCC submitted documentation to the Secretary of the Commonwealth that resulted in changing the congregatiоn‘s name from “Newton Presbyterian Church” to “Newton Covenant Church.” It then submitted a notice to the Great American Insurance Company (GAIC) requesting a defense in the Suffolk Superior Court action under a $1 million Directors and Officers insurance policy (Policy). Acknowledging that the named insured under the Policy was NPC, not NCC, the notice asserted that NCC was, as a matter of law, the same legal entity as the named insured. App. 134-135. On April 26, 2017, GAIC sent a letter denying coverage.
On November 6, 2017, the Superior Court awarded рartial summary judgment to NPC and the Presbytery of Boston. In a separate judgment, the court later declared that “NPC is the sole and exclusive owner of the property” in question and ordered NCC and its members to vacate the premises. App. 85. Accordingly, the Secretary of the Commonwealth restored the registered entity namе to “Newton Presbyterian Church.” App. 127. NCC‘s officers then filed Articles of Organization with the Secretary of the Commonwealth to create a new entity called the “Nеwton Covenant Church.” On June 14, 2018, the parties reached a settlement agreement to dismiss the lawsuit with prejudice and to vacate the partial summary judgment order.2
On Dеcember 21, 2018, Plaintiffs NCC and its individual officers brought this action against GAIC for breach of contract, alleging that GAIC, as their insurer, failed to defend and indemnify them in the state court аction. The district court granted GAIC‘s motion to dismiss the complaint for failure to state a claim under
II
We review de novo an order granting a motion to dismiss. Rodi v. New England Sch. of Law, 389 F.3d 5, 12 (1st Cir. 2004). “To survive a motion to dismiss, a complaint must contain sufficient factual matter, accepted as true, to ‘state a claim to relief that is plausible on its face.‘” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007)). While “a district court is generally limited to considering ‘facts and documents that are part of the complaint,‘” Giragosian v. Ryan, 547 F.3d 59, 65 (1st Cir. 2008) (quoting Trans-Spec Truck Serv., Inc. v. Caterpillar Inc., 524 F.3d 315, 321 (1st Cir. 2008)), it may also consider “documents incorporated by reference in [the complaint], matters of publiс record, and other matters susceptible to judicial notice,” In re Colonial Mortgage Bankers Corp., 324 F.3d 12, 20 (1st Cir. 2003).
An insurer must defend its insured “when the allegations in a complaint [against the insured] are reasonably susceptible of an interpretation that states or roughly sketches a claim covered by the policy terms.” Billings v. Commerce Ins. Co., 936 N.E.2d 408, 414 (Mass. 2010). As relevant here, the Policy defines “Insured” to includе both the “Organization” and “Insured Persons.” Add. 12. “Organization” refers to “the entity named” in certain declarations, here the NPC, while “Insured Persons” includes, among others, “persons whо were, now are, or shall be directors, trustees, [or] officers . . . of the Organization.” Id. Plaintiffs assert that, at the time of the state court action, they qualified as “Insured[s]“: thе NCC as an “Organization” and the individual officers as “Insured Persons.” App. 15-16.
Plaintiffs’ allegations are not reasonably susceptible of an interpretation that would statе a claim covered under the Policy. Although the Policy covers “legal fees . . . incurred in the investigation or defense of any Claim,” it defines “Claim” to include only, as relevant here, a “civil proceeding . . . made against any Insured.” Add. 11 (emphasis added). It is uncontested that the only “Organization” named under the Policy as an “Insured” is an entity called “Newton Presbyterian Church.” Therefore, to the extent that NCC claims it was a distinct organization even prior to its separate registration with the State, it was not within the definition of an insured “Organization.” To the extent that NCC claims instead that it was a segment of the original NPC at the time of the state court complaint, coverage is barred for another reason: § IV.H of the Policy. That provision, one of a handful of “Exclusions” under the Policy, precludes coverage for claims betwеen insureds.3 See Mt. Airy Ins. Co. v. Greenbaum, 127 F.3d 15, 19 (1st Cir. 1997) (“There is . . . no duty to defend a claim that is specifically excluded from coverage” under Massachusetts law). And, finally, to the extent that NCC claims it was the original organization that had simply undergone a formal name change, once again that would implicate § IV.H‘s exclusion. As the district court observed, “the complaint alleges that NPC and NCC were, at best, the same entity.” Add. 30. Because “insureds would
As for the individual plaintiffs who are сurrent officers of the NCC, § IV.H of the Policy works a similar effect, given any of the alternative assumptions just discussed. Thus, because current NCC officers claim to have been “Insured Persons” as defined by the Policy, their claim must be that they were officers of the named insured, NPC, at the time of the state court action. If so, NPC would be in litigation аgainst its own officers. Accordingly, the Policy expressly precludes claims of this nature.5
Affirmed.